Why E-Commerce Trends Necessitate the Adoption of Automation and Analytics Tools in the Retail Industry

In November 2017, the popular online retailer ASOS introduced a new “try before you buy” service. The scheme, as the name suggests, allows customers to order multiple items — say, the same shirt in different sizes, or different items altogether — and try them on. Then customers can return the items they do not want, and ASOS charges only for the items they keep.

This flexibility may be helping e-commerce businesses win market share, but for many retailers, the inevitable flood of returns make for a growing risk, a report from Brightpearl finds.

Surveying 4,000 people and 200 retailers in the U.S. and the U.K., researchers found that people may buy two or three more items per month if “try before you buy” was an option. These potential sales gains, however, may be wiped out by the costs of processing returns.

Meet the Intentional Returner

As e-commerce makes the return process simpler and cheaper, shoppers are increasingly viewing easy returns as an important and expected part of the online shopping experience. A significant majority (86%) of people expect returns to be free, a trend that is consistent across age groups.

A full quarter of respondents say that they have made purchases with the intention of returning some of the items, and this percentage is higher for female and younger shoppers. Respondents between the ages of 25 and 34 are the most likely to have shopped this way.

Source: Brightpearl

Retailers realize that an easy returns process is crucial for remaining competitive, not only with brick-and-mortar retailers but also with other e-commerce businesses.

According to the report, the “try before you buy” model may spread to a quarter of retailers by 2019. While currently only 17.5% of the surveyed retailers offer a “try before you buy” option, among those retailers that have not adopted to practice, 8.5% say that they plan to do so in the next 12 months, and another 30% say that they may.

Costly Returns

The cost of returns for retailers, however, is not insignificant — and likely to increase. The average monthly cost of processing returns (including cleaning and repackaging) is $1,555 in the U.S. and $1,500 in the U.K.

Source: Brightpearl

Retailers could charge for returns in order to recoup these losses, but the vast majority of the respondents say that they expect returns to remain free. Furthermore, shoppers want returns to be processed in three to five days, but six days is the average length of time it takes for reimbursements.

The expectation of free and fast returns is unlikely to go away. Instead, the report suggests, retailers ought to invest in automation in order to reduce human errors in the returns process and cut back-office costs. Returns data would provide retailers with better data about various product categories and allow for improved inventory forecasting.